Denver Gold Forum September 21, 2015 Octavio Alvdrez, CEO LSE:Fres - - PowerPoint PPT Presentation

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Denver Gold Forum September 21, 2015 Octavio Alvdrez, CEO LSE:Fres - - PowerPoint PPT Presentation

Well placed to address cyclical uncertainties Denver Gold Forum September 21, 2015 Octavio Alvdrez, CEO LSE:Fres BMV:Fres www.fresnilloplc.com Disclaimer This document includes statements that are, or may be deemed to be,


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Denver Gold Forum

September 21, 2015

Octavio Alvídrez, CEO LSE:Fres BMV:Fres www.fresnilloplc.com

“Well placed to address cyclical uncertainties”

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21/09/2015 This document includes statements that are, or may be deemed to be, “forward-looking statements”. These forward- looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, statements regarding the Fresnillo Group’s intentions, beliefs or current expectations concerning, among other things, the Fresnillo Group’s results of

  • perations, financial position, liquidity, prospects, growth, strategies and the silver and gold industries.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and

  • circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the

Fresnillo Group’s operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates, may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. In addition, even if the results of operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates are consistent with the forward- looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the US dollar and Mexican Peso exchange rates), the Fresnillo Group’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources

  • r reserves, changes in its business strategy, political and economic uncertainty.

Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this document speak only as of the date of this document, reflect the Fresnillo Group’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Fresnillo Group’s operations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment

  • decision. Subject to the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing

Rules or applicable law, the Fresnillo Group explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in the Company’s expectations or to reflect events or circumstances after the date of this document.

Disclaimer

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21/09/2015

Location Key Highlights

World’s largest silver producer (45 moz in 2014) and Mexico’s second largest gold producer (596 koz in 2014) Market cap of US$6.8 billion* Silver resources of 2 billion ounces and gold resources of 34 million Mining concessions of 2 million hectares in Mexico and 370 thousand hectares in Peru Cash costs and AISC amongst the lowest in the industry Substantial, high quality project pipeline and strong commitment to disciplined and sustainable growth: production target of 65 moz of silver and 750 koz of gold by 2018 Focus on projects that can be developed into low-cost, world- class mines

  • As at 17 September 2015
  • ** Operations at Soledad-Dipolos are currently suspended

Fresnillo plc mines (6 and a satellite mine)** Development projects (2) Advanced exploration projects (4) Prospects in drilling Prospects at an early stage

SOUTH PERU HERRADURA DISTRICT CIÉNEGA DISTRICT FRESNILLO DISTRICT ORISYVO SAN JULIÁN

Fresnillo at a Glance

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Our Business Model and Strategy

Our Business Model…

  • 1. Maximise potential of existing operations
  • Operate at 100% capacity
  • Low-cost producer
  • Optimise mining method and metallurgy to maintain high

recovery rates

  • 2. Deliver growth through development projects
  • Track record of delivery on time and on budget
  • Focus on CAPEX control
  • Specialised Engineering and Construction team
  • 3. Extend the growth pipeline
  • Evaluate early-state acquisitions
  • Maintain reserves for 10 years
  • Ensure organic growth and assess key acquisition
  • pportunities
  • 4. Advance sustainable development
  • Improve general health
  • Reinforce safety
  • Minimise the environmental impact
  • Maintain sound relations with communities

…supported by four strategic pillars to create value

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21/09/2015

  • Silver production of 45 moz and gold production of 596 koz
  • Revenues: US$1.4 billion
  • Continued focus on cost control
  • Operating profit: US$245.6 million
  • EBITDA: US$567.3 million; EBITDA margin of 40.1%
  • Capex of US$425.6 million and total investment in exploration of US$184.5 million

(including US$15.7 million capitalised)

  • Total workforce: 7,090 (49.4% unionised employees and 50.6% contractors)
  • Total assets: US$3.8 billion (as at 30 June 2015)
  • Cash and investments: US$475.7 million (as at 30 June 2015)

2014 Highlights

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21/09/2015

Operations Review

Fresnillo

Stabilise and then improve ore grades and production to provide solid base for potential expansion Ore grades expected to move towards reserve grade once operating stope flexibility regained

Key operating statistics 1H15 Silver production – moz 7.8 Cost per tonne – US$/t 48.5 Gold production – koz 15.1 Cash cost - US$/oz 5.8 Silver ore grade - g/t 220 AISC - US$/oz 11.1 Gold ore grade - g/t 0.50 AISC (LoM) (2023) – US$/oz 6.20

1H15 silver production decreased: Lower silver

  • re

grade reflecting limited access to high ore grade areas Lower volumes processed due to development delays and stope instability Actions taken: Enhanced contractor supervision Additional contractors Measures to manage stope instability Should allow development rates of c.4,000m / month to be maintained Advancing declines in order to reach higher grade veins & regain operating stope flexibility

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21/09/2015

Operations Review (Cont’d)

Saucito Ciénega

Efficiency improvements at Saucito II planned for 1H16: installation of vibrating screens Conclude analysis of alternatives for potential expansion to either 5,000 or 6,000 TPD post good exploration results

Key operating statistics 1H15 Gold production – koz 45.7 Silver production – moz 2.1 Gold ore grade - g/t 2.25 Silver ore grade - g/t 117 Cost per tonne – US$/t 66.7 Cash cost - US$/oz 297.0 AISC - US$/oz 650.0 AISC (LoM) (2026) – US$/oz 803.1 Key operating statistics 1H15 Silver production – moz 11.4 Gold production – koz 44.7 Silver ore grade - g/t 341 Gold ore grade - g/t 1.50 Cost per tonne – US$/t 42.7 Cash cost - US$/oz 0.6 AISC - US$/oz 6.0 AISC (LoM) (2021) – US$/oz 6.0

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21/09/2015

Operations Review (Cont’d)

Herradura Noche Buena

Expect to reach steady state production by 4Q15 after ramp-up and resolution of solution processing issues

Key operating statistics 1H15 Gold production – koz 188.1 Gold ore grade – g/t 0.74 Ore processed – mt 10.9 Total volume hauled – mt 57.7 Cost per tonne – US$/t 8.7 Cash cost – US$/oz 490.2 AISC - US$/oz 873.2 AISC (LoM) (2019) – US$/oz 717.0

Continue to focus on containing costs and maximising efficiency of production

Key operating statistics 1H15 Gold production – koz 70.5 Gold ore grade - g/t 0.48 Ore processed – mt 8.7 Total volume hauled – mt 42.3 Cost per tonne – US$/t 8.2 Cash cost - US$/oz 897.9 AISC - US$/oz 940.9 AISC (LoM) (2019) – US$/oz 1,124.5

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YEAR

PROJECT

2018 2019

Investment (US$ million) Expected Avg. Annual Production

2020 2015 2016 2017

515

10.3 mill Oz Ag & 44 thds Oz Au

SAN JULIÁN

CONSTRUCTION LEACHING PLANT PRODUCTION CONSTRUCTION FLOTATION PLANT

30

3 mill Oz Ag

FRESNILLO 9,000 TPD (Optimization project)

MINE DEVELOPMENT & PLANT ADEQUATION PRODUCTION DETAILED ENGINEERING

155

3.5 mill Oz Ag & 13 thds Oz Au

PYRITES PLANT (Optimization project)

DETAILED ENGINEERING LEACHING PLANT CONSTRUCTION PRODUCTION CONSTRUCTION TAILINGS FLOTATION

55

15 thds Oz Au & 1.3 mill Oz Ag

CIENEGA 5,000 TPD (Optimization project)

MINE DEVELOPMENT PRODUCTION DETAILED ENGINEERING PLANT CONSTRUCTION

350

136 thds Oz Au

ORISYVO

MINE DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION

300

10 mill Oz Ag & 30 thds Oz Au

JUANICIPIO

MINE DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION

155

200 thds Oz Au

CENTAURO EXTENSION 365

225 thds Oz Au

CENTAURO DEEP

DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION DEVELOPMENT PRODUCTION 2ND DYNAMIC LEACHING PLANT CONSTRUCTION

Expected Delivery of Growth

(1) (2) (1) Estimated. (2) Total average annual production. (3) Approved (3) (3)

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21/09/2015

Approved Projects San Julián

Mining works at the main ramp concluded & further progress made on plant infrastructure However, delays in permitting, weather-related issues and high rotation of contractor personnel due to project’s remote location together resulted in execution delays

Key metric estimates

  • Avg. annual silver production

10.3 moz

  • Avg. annual gold production

43.9 koz Pre-operative capex $515 m Cash cost (average LoM) $7.77 /oz All-in sustaining costs (average LoM) $9.33 /oz Phase 1 capacity (DLP to treat ore from veins) 3,000TPD Phase 2 capacity (flotation plant to process

  • re from disseminated ore body)

6,000TPD Life of mine 13 years

Phase 1 now expected to be commissioned 1H16 (vs. previous expectation of 4Q15); phase 2 remains on track (4Q16)

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21/09/2015

Approved Projects San Julián: Commissioning 1H16

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21/09/2015

Detailed engineering continues

Approved Projects Pyrites Plant

Key metric estimates

  • Avg. annual silver production

3.5 moz

  • Avg. annual gold production

12.8 koz Pre-operative capex $155 m Cash cost (average LoM) $2.51 /oz Saucito I Saucito II Fe Plant

Filtration Plant

Leaching Plant Hauling (Truck) Fresnillo Plant Tailings Plant Old Tailings

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21/09/2015

* Assuming a 5,000TPD expansion

Potential Brownfield Expansions

Ciénega Optimisation Fresnillo Optimisation Centauro Extension Centauro Deep Description Optimisation project to increase capacity Optimisation project to increase capacity Natural evolution of the Centauro pit at Herradura Potential underground mine beneath the Centauro pit at Herradura Expected avg. annual production 15 koz gold 1.3 moz silver* 3 moz silver 200 koz gold 225 koz gold Estimated pre-

  • perative capex

$55 m* $30 m $155 m $365 m Status Evaluation of increasing capacity to either 5,000TPD or 6,000TPD, following good exploration results Post evaluation of alternative options, smaller expansion to 9,000TPD now planned (from previous expectation

  • f 10,000TPD)

Evaluation of optimal pit design based on increased reserves as at YE 2014 Additional exploration activities ongoing to accurately de-lineate the ore bodies Expected commissioning 2018 2017 2019 2020

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21/09/2015

Advanced Exploration Projects

Juanicipio (JV with MAG Silver. Fresnillo: 56%) Orisyvo

Key metric estimates (100% basis)

  • Avg. annual production

10 moz silver 30 koz gold Pre-operative capex $300 m Indicated & inferred resources 205 moz silver 811 koz gold First production 2018

Positive drilling results will result in an increase in inferred resources Preliminary economic assessment in progress Assessing a 8,000TPD mine with a DLP processing facility; focusing on higher grade zones of the gold resource base

Key metric estimates

  • Avg. annual production

136 koz gold Pre-operative capex $350 m Indicated & inferred resources 8.7 moz gold 11.4 moz silver First production 2018

8km from the Fresnillo mine; Juanicipio’s mineral zones are located in silver-gold rich sulphide shoots of the veins. This project will be developed on a stand-alone basis

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21/09/2015

Projects in blue are being prioritised

Strong Organic Growth Pipeline

Fresnillo Saucito I & II Herradura (DLP) Noche Buena Ciénega - San Ramón Soledad &Dipolos*

San Julián Pyrites Plant Orisyvo Juanicipio Cluster Cebollitas Centauro Deep

Fresnillo District Rodeo Guanajuato Tajitos Candameña Guachichil Pilarica (Perú) San Nicolás Guazapares Coneto Lucerito Cebadillas La Yesca Cairo Dátil Amata (Perú) Norias Sonora and Sinaloa : San Javier Nudo Carina Cerritos Dorado Rosario Bellavista Olivos Chihuahua:

  • S. Brígida Rosetillas

SJPinal Lucero Tempisque Durango: Pereñita La Huerta El Carmen Zacatecas: Urite Atotonilco Corredor Concha-Nieves Argentum Villa García Perú: Huacravilca

  • Sto. Domingo

La Pampa

Systematic Project Generation

Mine Operations Development Projects Prospects in drilling Early stage Exploration Advanced Exploration

* Operations at Soledad & Dipolos are currently suspended.

Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines

34% 1% 35% 30% 2015 Budget: c.US$160m

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21/09/2015

Proven Track Record of Delivering on Time and on Budget

2010 2011 2012 2013 2014

Saucito I commissioning ($273m / 9 moz Ag) San Ramón satellite at Ciénega ($20m/ 25 koz Au; 2.5 moz Ag) Commissioning of DLP ($116m / 50 koz Au) Commercial production at Soledad-Dipolos began ($68m / 100 koz Au) Milling capacity expansion at Ciénega ($25m / increase of 180 kTPY) Saucito II commissioning ($235m / 8 moz Ag) Commercial production at Noche Buena began ($63m / 75 koz Au)

(Total invested / expected average annual production)

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  • 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2014 2015 2016 2017 2018 Thousand Oz Yr

Attributable

Juanicipio - 56% Pyrites Plant San Julián Saucito II Saucito I Noche Buena Herradura Ciénega Expansion Ciénega 9,000 TPD Fres Expansion Fresnillo

Achieving 65moz Silver by 2018

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  • 100

200 300 400 500 600 700 800 900 1,000 2014 2015 2016 2017 2018 Thousand Oz Yr

Attributable

Orisyvo Juanicipio - 56% San Julián Pyrites Plant Saucito II Saucito I Ciénega Expansion Ciénega Fresnillo Nochebuena Dynamic Leaching Herradura

Achieving 750koz Gold by 2018

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21/09/2015

* Includes sustaining capex for projects yet to be approved

CAPEX & Exploration Spend

Capex for the full year 2015 now expected to be in the region of US$570m (vs. original budget of c.US$700m) Total risk capital invested in exploration in 2015 now expected to be around US$160m (vs. original budget of c.US$170m)

CAPEX Expectations

US$ Million

2015 Sustaining New Prior

  • Sustaining

$145 $185

  • Mining Works

(Underground) $105 $87

  • Mining Works

(Stripping) $89 $89 New Projects

  • San Julián

$130 $133

  • Pyrites Plant

$1 $60

  • Saucito II

$53 $53

  • Merrill Crowe at

DLP $25 $25

  • Ciénega’s exp

$4 $30

  • Others

$18 $32

100 200 300 400 500 600 700 800 900 2015 2016 2017 2018 2019 2020

Million Usd

Sustaining Projects Approved Projects for Approval

*

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21/09/2015

Advancing our Sustainable Development

Zero fatalities since May 2014 Zero new cases of occupational diseases in 1H15 Fresnillo included in the new “Euronext‐Vigeo EM 70” Environment, Social and Governance (ESG) Index Maintaining sound relations with personnel and unions Focusing on effectively engaging with local communities Minimising the environmental impact of

  • ur activities
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Conclusions & Outlook

“Well placed to address cyclical uncertainties”

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21/09/2015

Conclusions and Outlook

  • Pricing environment continues to be challenging
  • However our strategic objectives remain unchanged

– Invest through the cycle, delivering growth and returns for our shareholders – Low cost operating mines to continue to provide a solid platform for growth – Development projects to deliver significant growth – Investment in exploration to further extend growth pipeline

  • Financial and operational flexibility allows us to adapt to market dynamics
  • Robust contingency plan if prices continue to decline and remain at lower levels for a

prolonged period

Remain on track to reach our production targets: 45-47 moz of silver and 715-730 koz of gold in 2015 65 moz of silver and 750 koz of gold in 2018

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21/09/2015

Investment Case

World-class assets Strong organic growth pipeline Operational excellence Competitive cash cost performance Financial strength and flexibility Strong community support